What typically happens if a policyholder does not pay premiums on a life insurance policy?

When a policyholder does not pay premiums on a life insurance policy, the policy typically lapses after a specified grace period. Most life insurance contracts include a grace period, which is a set time frame during which the policyholder can make a premium payment without losing coverage. If the premium is not paid within this grace period, the policy will lapse, meaning the insurance coverage is no longer in force.

This is an important protection for policyholders, as it allows them a final opportunity to pay their premiums and maintain their coverage. Once the policy lapses, the policyholder usually will not enjoy any benefits from the policy and will need to either reinstate it (if they can do so under the insurer's terms) or purchase a new policy altogether. Understanding the implications of a policy lapse is crucial for maintaining continuous life insurance coverage and ensuring that beneficiaries remain protected.